Of really smart, capable leaders who are rewarded for actually focusing on these management issues, and they're not, and certainly not with his administration.
So, Mimi, thank you so much for this opportunity.
Really appreciate it.
All right, and that's Max Dyer, president and CEO of the Partnership for Public Service.
You can find them at ourpublicservice.org.
And that does it for us today.
Thanks, everybody, for joining us.
Thanks for calling in.
Have a great day.
We'll see you again tomorrow morning at 7 a.m. Eastern.
Welcome back to Washington Journal.
Joining us now to talk about the $1.5 trillion budget for fiscal 2027 is Todd Harrison of the American Enterprise Institute.
He's a senior fellow there.
Todd, welcome to the program.
Hi, thanks for having me.
In talking about this defense budget at $1.5 trillion, what was your initial reaction to that number?
Honestly, my initial reaction was: you know, I'll believe it when I see it.
Show me the documents that actually add up to this amount of money because it's a bit hard to believe.
We have never seen an increase of this magnitude, of this percentage in the defense budget, you know, absent, you know, an event like World War II.
So, you know, I am curious to see, you know, how are they going to be allocating this money?
Is it a real increase in just one year or is there some other catch to it?
And when you say that you've never seen a percentage this high, we're at about 50% increase from last year.
What's a typical increase from year to year?
Well, you know, in President Trump's previous defense budget request, they only requested a flat budget.
So it was a 0% increase.
And then, you know, they relied on Congress to appropriate some additional money outside the regular budget through this reconciliation process.
And so that bumped up the defense budget by about $150 billion.
But the administration itself was planning a flat defense budget, so 0%.
I mean, a typical increase that we see in the defense budget would be either at the rate of inflation, 2 or 3% typically, or maybe a couple of percentage points above inflation.
But that's more typical.
Well, let me show you what President Trump posted on Truth Social about this.
This is from January 7th.
He says this: After long and difficult negotiations with senators, congressmen, secretaries, and other political representatives, I have determined that for the good of our country, especially in these very troubled and dangerous times, our military budget for the year 2027 should not be $1 trillion, but rather $1.5 trillion.
This will allow us to build the, quote, dream military that we have long been entitled to.
And more importantly, that will keep us safe and secure regardless of foe.
Do we have any understanding, Todd, about what is the definition of a dream military and what that would include?
We don't, not precisely.
I think we do have some indications, though, from what the president, his advisors, and some members of Congress that he's listening to on defense issues, what they've said publicly about what they want for defense.
You know, it likely includes a large increase in funding for missiles and munitions to build up our stockpiles, our inventories of key munitions that we might need in case we got into a protracted conflict with a major adversary like Russia or China.
It probably is going to mean more money for shipbuilding to build up the Navy.
The president has talked about the Golden Fleet, he calls it, building out lots of new types of ships, but many more ships and increasing the overall size of the Navy.
It probably would include funding for Golden Dome, the president's signature initiative for developing a homeland missile defense system, which will be quite expensive to actually realize the vision he has outlined for that.
So I think there are a lot of different things that could be part of it.
But again, the devil's in the details and it doesn't happen in one year, right?
These things take time.
So you could increase the budget by 50% in one year.
But if you don't hold it at that level, if you don't sustain that increase for 5, 10, 15 years, you don't actually build up that military that you're aiming for.
Now, speaking of sustaining that funding, the president has said that he's going to be using tariff revenue to make up that difference.
Estimates are that tariff revenue are much less than that $500 billion difference.
What do you think of using tariffs as a funding source for the U.S. military expansion?
I mean, you know, in reality, the defense budget is paid out of the general revenues of the Treasury.
So money comes in from a lot of sources, from tariffs, from income taxes, from corporate taxes.
You know, that money comes in and then the money goes out to defense and non-defense programs.
And so it doesn't really matter where the money is coming from.
It's all fungible in the overall federal budget.
The idea, though, that this increase could be offset by an increase in revenue specifically from tariffs, that just hasn't borne out yet.
Tariff revenue is not that high, not yet.
And that tariff revenue, the president has promised it for other things as well.
He's promised, you know, rebate checks for U.S. taxpayers.
He's promised payments to farmers to offset money they've lost because of business.
They can't export their crops.
Prices have fallen.
So I think that there's, I don't know, a lot of confusion about how much tariff revenue and how much could it actually offset an increase in the defense budget.
I'm more interested in how does he get the money appropriated for this defense budget?
How does he get it through Congress?
And is it in a way that leads to a sustainable, stable level of funding?
Or is this kind of a one-time sugar high, an influx in defense funding for one year that then gets pulled away the following year?
Well, let's talk about that because the Committee for Responsible Fiscal Budget says that their estimate is that this would add to the budget deficit $6 trillion in debt over 10 years.
So how does one get that through Congress given the budget hawks who are saying our deficit, our national debt is already over $36 trillion at this point?
Yeah, well, you know, that projection, of course, assumes that the funding increase of about half a trillion a year is sustained over 10 years.
And then you add in interest costs because ultimately this does result in more borrowing.
And so, yeah, I would pump the brakes there and say I'm not so sure that's what the president's actually proposing.
He said the budget for 27 will go up to 1.5 trillion.
I actually suspect that what they're envisioning doing is kind of like they did last year and using this reconciliation budget process in Congress, which is just a one-year increase in funding.
And they may play some budget games, use some gimmicks to count some of the reconciliation money from last year that they counted towards this year's budget.
They may count that money again towards 27.
That's not new money.
That's just an accounting shell game.
But that could add $100 billion to what they claim for 27 and then maybe add another $400 billion in assumed reconciliation funding they think Congress will pass this coming year.
That's just a one-time increase.
So when they're, you know, when the Congressional Budget Office is doing the scoring, which is kind of the tab keeping of, okay, how much are you adding to the deficit?
Since that's a reconciliation and it's one time, they're only going to count that as a $400 billion increase total over 10 years because it's not intended to be sustained.
And so in that case, then, yeah, they just need to find something they could probably claim, you know, a relatively small amount of tariff revenue per year over 10 years and use that to pay for a one-year, one-time increase in defense funding, and then claim that it's budget neutral.
But, you know, all of this is really just shell games of moving money around on paper.
And if you have a sudden increase in the defense budget that's not followed by a sustained level of funding, you could end up making some pretty foolish investments.
You could start programs that you then have to cancel.
You could, you know, increase the size of your force and then have to immediately decrease it.
So, you know, which would be very inefficient with that funding.
Would it not?
It's very inefficient if that's what ends up happening.
So, you know, again, the devil's in the details.
I'm curious to see what plan they actually come out with.
And, you know, specifically, what is their five-year and 10-year plan for this funding?
Well, I'll invite our viewers to join our conversation with Todd Harrison of AEI.
We're talking about the defense budget.
If you'd like to join the conversation, give us a call right now.
Democrats are on 2027-8000.
Republicans, 202-748-8001.
Independents, 202-748-8002.
We have a line set aside for active and former military members.
That's 202-748-8003.
That's the same number you can use to text us.
I want to ask you about the President Trump's recent executive order targeting defense contractors and executive compensation, also stock buybacks.
Can you explain what that executive order does and what you think could be the impact?
Well, the intent of the order appears to be to get defense companies to use more of their own internal profits to reinvest in their companies, to expand production lines, and to invest in developing new and innovative technologies that would benefit the military.
And, you know, typically that has been something that defense companies, like any other business, you know, in their free market economy, they decide for themselves and their shareholders and their board of directors decide how much of profits do they reinvest in the company to ensure future growth versus how much do they pay out in dividends or in stock buybacks and things like that.
So what this executive order does is it's basically going in and putting restrictions on defense companies if they're not performing, if they meet certain criteria, which are not fully defined yet.
More will come on that.
But if they're poor performing, if they're deemed to be poor performing on their contracts, then the government is saying we're going to come in and we are going to limit what you can do in terms of executive compensation, how much you can pay your CEO and other senior executives.
And we're going to limit what you can do in terms of managing your own finances and your own business to force you to spend more of the money on things that are of interest to DOD.
I think this is born from a deep and long-simmering frustration with some defense companies, not all, that they've not been investing enough in new technologies and expanded capacity that DOD might need in a wartime situation.
But, you know, this is a very, you know, hard-nosed way of forcing that to happen.
It's not really creating incentives.
It is forcing the companies and limiting what they can do in the free market.
And Todd, what do you think that that's, is it, would it help with improving production and reducing cost overruns?
Yeah, I think it has a strong chance that it may backfire.
That you may see other defense companies or commercially oriented companies that are thinking about working with the military and thinking about getting into defense.
I think you'll see them refuse to sign contracts that have these terms in them and may turn away from the defense industry because they don't want these restrictions put on their company.
I think for a lot of the big prime companies, like Lockheed, like Raytheon, Northrop Grumman, those companies, they don't have much of a choice because virtually all of their business comes from the U.S. government.
And so I think it's going to be a real struggle for these companies to manage in this environment where the government is kind of micromanaging how they run their own business.
I fully understand the sentiment and the desire to get defense companies performing better and investing more in the success of their customer, the U.S. military.
I don't know that this is the right way to do it, though.
Let's talk to callers.
We'll start with Greg in Florida, Democrat.
Good morning, Greg.
Good morning.
I wanted to call in and Mimi and Todd, I thank you for taking my call.
The nine countries that spend the most money other than us, I'm told their budgets, if you add all of them together, is about the same as what the United States currently spends.
So I'm trying to understand why President Trump thinks he needs another $400 to $500 billion of artillery.
And is there a way that they can cut plans?
For instance, they just recently signed for the S-47 planes.
Why they can't cut other things that they're currently doing that are no longer efficient?
Yeah, I think you raised some great points there.
I would say in comparing the U.S. defense budget to other countries' defense budgets, I would offer two cautions.
One, it is very difficult to compare them because other countries are not nearly as transparent as the United States in reporting their true defense costs, and in particular, China.
And the estimates on China actually vary considerably.
I've seen some analysis from my colleague at AAI, McKenzie Eaglin, where it suggests that China's defense spending actually is coming pretty close to U.S. defense spending when you actually match it up apples to apples.
And so a lot of uncertainty there.
So it's not necessarily true that the next nine countries spend less than the U.S. military, even all combined.
That was true years ago, but that is becoming less true and much more uncertain of a proposition.
The other thing is that the U.S. has traditionally, since end of World II, World War II, been the provider of global security and the rules-based international order that benefits us as a nation economically, but also in terms of national security.
And that requires a strategy where the U.S. is forward deployed, virtually all regions of the world that we are out there active, operating in the world, so that conflict does not come to us, right?
We inherently play an away game, whereas a lot of the other countries you're comparing us to, they only want to play a home game.
They only really operate militarily in their region, in their immediate vicinity.
They're not trying to preserve the international order.
They're not trying to protect the flow of commerce around the world.
So it costs a lot less, right?
Their strategy is much more limited than ours.
And so I think it's difficult to make a comparison when our strategy and our objectives are very different.
And are there allies in the Pacific that we could depend on, Todd, if it came to a conflict with China, that Japan, for instance, South Korea, Australia?
Absolutely.
Those are three of our main allies in the region.
They've all been increasing their defense spending.
They've also been doing a lot of things to invest in new and innovative capabilities to fight the future warfight.
They are absolutely the bedrock of our allies in that region.
But they also need us.
We are the key enabler that allows their forces to be able to fight.
I mean, for example, if South Korea gets into a major conflict with North Korea, South Korea has the ground forces.
They know the terrain.
They have the weapons that they need to operate.
But there are key enablers they need from us, like intelligence and surveillance to know where the adversary forces are, where to strike.
They also need from us nuclear deterrence.
They do not have nuclear weapons of their own.
North Korea does.
And so they rely on us to provide that threat of retaliation should North Korea do the unthinkable.
So, you know, I think it is, you know, we help them, but they also help us.
And they are the frontline defenders in the region.
And so it's important to remember that, you know, that's the nature of an alliance is that it's mutually beneficial.
And I think that's certainly true in the Indo-Pacific region.
I used to work with DOD for 20 years, and it's going to be a whole bunch of programs that he's going to start, and then it's never going to come to fruition because the Democrats most likely will win in the midterms, and they're going to block some of these programs and all this wishful list of things.
I think the president is just acting like a rich, spoiled kid, playing with our money.
And, you know, I don't see these things coming to fruition.
So I do agree with the speaker.
Todd?
Yeah, well, you know, I don't actually think Golden Dome is a waste of money yet.
I think it's too soon.
It's too soon to tell.
It's been almost a year now since the executive order came out, and we haven't seen an architecture from the administration.
So we don't know what it is.
You know, I think that there are many possibilities where they could invest in greater missile defense systems, especially some of the things that are already in development that would be beneficial regardless of whether you call it golden dome and regardless of whether you use it to defend the homeland.
You could actually use many of these systems to defend our U.S. forces that are deployed overseas and our allies and partners around the world.
So I think there could be a lot of utility depending on what they use the golden dome money to invest in.
So I would say the jury is still out on that.
But to your broader point, I think that there are a lot of things the administration has been proposing, programs that have been started that are really unfunded ambition right now, that they have not laid out a five, 10-year funding plan for how they're going to pay for things like the X-47 sixth generation fighter, this golden fleet that the president has talked about in some vague terms.
Like where's the funding that they're going to pay for that?
Because it's not something you buy just at once.
It's something you actually have to pay for year after year over a long period of time before you realize that capability.
And so that is my question is where is the sustained funding to see these things through fruition?
That's why I'm worried if this is just a one-time increase without a follow-on, that we may go down the path of starting lots of programs, ramping up production of things, and then not actually follow through and then not get anything out of it, which just creates more inefficiency in the system.
And Todd, can you talk a little bit more about the F-47 that you mentioned?
This is the advanced fighter and why that's a priority for the administration, given the F-35 and what kind of advantages that F-47 will give us over what we've got currently.
Yeah, so, you know, this is a sixth-generation fighter.
The F-35 is a fifth-generation fighter.
It is something that the Air Force has been working on really since the first Trump administration that this program has been in development.
It was previously known as NGAD, the next generation air defense.
And so that program has moved through development, it's matured, and it got to the point at the end of the Biden administration that the Air Force had to make a decision: do we move forward with this program, you know, and figure out how to pay for it, or do we pause?
And the Biden administration decided to pause because they didn't think they had the funding because estimates are that each of these aircraft will cost about three times as much as an F-35.
And then it does beg the question, you know, is it three times the capability?
Well, it's hard to judge on the outside because a lot of those capabilities are classified.
But we know it is a manned, a crewed sixth generation fighter where a lot of the technology in the air domain seems to be going uncrewed.
And so there are real questions about, you know, are we starting this program?
Are we going to ramp up production?
And, you know, we will be building this aircraft through the 2040s, maybe the 2050s.
Is this the technology that's going to be relevant at that time?
Are we, you know, doubling down investing on manned fighter aircraft when these things are about to go obsolete?
So there are real questions about that.
The Biden administration said, look, there's not funding for this, so let's pause it and reconsider.
It was a big surprise in the defense industry and in the Washington, D.C. defense community when the president suddenly came out and announced the award of that contract Out of the Oval Office, even before we had a new Air Force secretary that was confirmed, who could go through the analysis that the last administration had finished.
So, yeah, there's still a lingering question of how are we going to pay for this fighter that costs three times as much per plane as the F-35s that we're building today.
Again, if there's a sizable increase in the defense budget that's sustained over time, the Air Force can afford that.
If it's not sustained, the Air Force is going to have to make some difficult choices about other things they want to cut within their budget.
Michael, a Democrat, Middletown, Connecticut, you're on the air, Michael.
Yes, hi.
This is Michael Anthony from Middletown, Connecticut.
I'm calling because I say that the defense budget should be cut.
It should be cut to a half a trillion because that's too much money.
$1.5 trillion is too much money.
We could increase money for child care expenses or we could for the SNAP program and for all these other programs, but they don't have money for, but they want to ask for money for the defense.
That's all about power.
Trump is a nut.
He just wants power.
And he should not be allowed.
The people should vote.
They should have the people vote where our money should go.
All right.
Todd Harrison.
Yeah, no, there have been people in the previous Trump administration who have actually said similar things about cutting the defense budget in half or by 40%.
You know, and so, yeah, I think that, you know, that would require a big shift in strategy.
You can't cut that much, of course, from efficiency savings.
Although, don't get me wrong, there's lots of inefficient spending in the defense budget.
It's not going to amount to that much, though.
What I would challenge people to do is actually go look at the specifics of what specific programs, what parts of the force would you cut?
How many brigades would you take out of the Army?
How many ships would you retire from the Navy?
How many fighter squadrons from the Air Force?
Go through and do that exercise to cut the budget to whatever level you feel is appropriate and see what you're left with and see if you're comfortable with that and what kind of strategy can you execute with that.
We actually at AEI, we put a tool online where you can do this.
If you go to Defense Futures, all one word, defensefutures.aei.org, you can log in there, make an account, and you can go through and try to cut or try to increase the defense budget however you want, and you can see what that actually does over time to your force and to your strategy.
Sue in New Jersey has sent us a text.
She said, So, what are the real reasons behind Doge?
Find money to spend on building up our military.
Can you talk, Todd, a little bit about the impact that the Doge cuts might have had on the Defense Department itself and then the ripple effects that that might have had among defense contractors?
Well, you know, I know Doge was a big topic of conversation this time last year.
It has pretty much faded into the background now, but the effects of the Doge cuts still linger.
Doge was not intended to cut money so we could spend more money on defense because Doge was cutting defense, you know, just like it was going through and cutting programs in other departments and agencies.
I mean, it did not try to eliminate things quite to the scale as it did with USAID and other organizations, but Doge definitely had an impact on DOD.
What we saw within DOD were a lot of personnel cuts.
And this was driven right out of the White House with Elon Musk and the email that went out from the White House saying there's a fork in the road, giving people the option to elect into this deferred resignation program, DRP.
What you ended up having happen is there were pockets within DOD where a lot of people decided to take that offer.
And so I'll give you an example within the United States Space Force.
A lot of what the Space Force does is it acquires systems, right?
You know, we don't build our own satellites in the military.
We rely on industry to do that.
And so you need a lot of acquisition people, a lot of contracting people.
Those are a lot of civilian positions within the Space Force.
They were eligible for this deferred resignation program.
And numbers I've seen show that about 20% of the Space Force's contracting workforce took the offer.
And so that's a lot of experience.
They just left and went out the door right when there's this influx of money for Golden Dome and other things that are coming in where the Space Force actually needs to put a lot of new things on contract.
And we just lost 20% of contracting workforce.
So that, you know, that has created a lot of problems within DOD.
They've tried to rehire some of these people, but often when you lose talent, it's gone.
They find a better job in industry or they just move on from government service altogether.
So I think Doge really hurt DOD more than anything over the past year.
Let's talk to James.
He's former military in Bronx, New York.
James, you're on with Todd Harrison.
My question to Todd is this.
At this particular time, where America is on five different regions right now, and you have troops.
Yes, my question is this.
At this particular time, you're asking for $1.5 trillion to fill up the Defense Department.
At this particular time, Trump, he's doing things at his own whim.
He's in various different countries.
And it seems as if right now this is unstable.
So why are people pushing for this type of money just because Trump decides that it's his call?
He has absolute authority to do what he wants to do, and no one can check his hand.
So it kind of leaves the American people, the system, vulnerable.
All right, Todd?
Yeah, no, I guess a few points I'd make.
One is, you know, in our Constitution as Commander in Chief, the President does have the authority to use the military to conduct strikes, you know, as the President deems are necessary and in the interest of national security.
So there's a lot of authority there.
And you do have the War Powers Act, but Congress has ceded a lot of that authority to the executive branch to conduct these types of one-off operations like we've seen, like the strikes in Iran that were just one night, you know, the strike or the operation in Venezuela, which was just one night of military operation, you know, and then the ongoing counter-drug stuff, taking out ships in the Gulf and the Caribbean.
You know, the president has the authority to do that.
It doesn't mean it's always a good decision to do these things.
But the increase in the defense budget, the president didn't actually connect it to these operations.
And these operations, because they have been one-off events, they can be absorbed within the current level of defense spending.
They're not that large.
Where you get into very large costs for military operations is when you put boots on the ground and you actually try to occupy territory.
That's where your costs start to go up significantly and they can build very quickly over time, as they did in Iraq and Afghanistan.
So I think to your broader point, though, of you know, we see these operations going on in different parts of the world, and sometimes they seem to be very different than what the president has espoused as his approach to national security in the past.
What we're seeing, I think, is a new national security strategy that is kind of forming in real time through the president's actions, not through the president's words.
And so, you know, I think analysts like me and others in this community, we are trying to look and trying to figure out and decipher, you know, what is this president's actual strategy?
And it appears to still be evolving.
And it's not clear, you know, how this all fits together in a coherent strategy.
And it may never fit together as part of a coherent strategy.
But, you know, that's what we're looking at is kind of a real-time evolution of U.S. national security strategy.
In Ordin, Nebraska, Bob is a Democrat.
Good morning, Bob.
Good morning.
Mr. Harrison, my question is, you want to get $1.5 trillion for Pentagon, but they can't even keep track of their own budget.
They have no idea what's going to where.
How are they going to keep track of $1.5 trillion?
So Bob's talking about the failure to pass an audit at the Defense Department.
Yeah, though, that has been a long-simmering problem for DOD really since the 1990s, that they were supposed to become auditable.
And, you know, if you dig into the details, and I've looked at this pretty carefully in the past, the problem is the accounting systems that DOD uses are very old.
They're very fragmented across the department, and they don't pass the right information between systems in order to pass a modern audit.
They weren't designed to because back when these systems were put in place and the processes were put in place, DOD wasn't required to pass an audit.
They are now required to pass an audit.
And so really what this ends up being is an IT problem that they cannot easily trace spending from the top level all the way down to show this is what you got for it.
This is the number of pieces of equipment that you got and you can show an inventory of receipts for them.
So yeah, that doesn't work.
And that has been an ongoing issue.
DOD is spending about a billion dollars a year, a billion with a B, on audit readiness, trying to upgrade these systems, upgrade these processes so that they can eventually one day pass a clean audit.
They are going to continue to run the audits and they're going to continue to fail and identify more and more issues.
But, you know, I would caution that those failures, that is a work in progress, right?
Every time you run an audit and you fail, you get actionable things that you can go back and fix and then you run it again.
And so that's going to take a time, a lot of time.
And I, you know, I share your frustration.
How much time, Todd, do we know how much time that will take?
We don't.
I would not expect it.
I mean, we've had parts of the military that have actually passed clean audits.
I think the Marine Corps has passed a clean audit.
I think the National Reconnaissance Office, which is part of the intelligence community, they passed, got a clean audit.
So there's some progress to show, but I would not expect that we will see all of DOD get a clean audit within this decade.
I think it's going to take longer and take a lot more money, quite frankly, to get ready for an audit.
All right, let's talk to Russell, Potomac, Maryland, Independent Line.
Hi, Russell.
Hey, good morning.
I just wanted to piggyback on the last caller saying that we haven't passed an audit in seven or eight years.
$1.5 trillion is a number that like most people can't even fathom.
So instead of intellectualizing and pontificating, I think we really need to go on a tax strike and have a revolution.
This is craziness.
ISIS killing people in the middle of the street.
And we're talking about like Trump asking for more money.
This is crazy.
It's craziness.
Thank you.
Anything you want to add, Todd?
No.
If you don't pay your taxes, you could get in a lot of trouble.
That is a crime.
Okay, one last question for you.
We got this from Adam in Maryland, who wants to talk about the, he says, the massive cost overruns and abusing how the National Guard troop temporary deployments are used.
Can you talk about the cost of those National Guard deployments and how those are being accounted for?
Yeah, so I'll tell you, I have not tried to look at the cost of that.
There is a cost, of course, when you activate folks from the Guard.
You're now paying them full-time pay.
And in many cases, they're getting temporary duty pay as well because they're not in their home location.
So you're paying stipends for their hotel and for their food and everything since they're on travel away from home.
It scales, obviously, with the number of people, but that's not something that I've tried to look at so far.
So I wouldn't want to hazard a guess as to how much that's added up to.
All right, that's Todd Harrison, Senior Fellow at the American Enterprise Institute, and they are at AEI.org.
Thanks so much, Todd, for joining us today.
Thanks for having me.
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You are so fair.
I don't know how anybody can say otherwise.
You guys do the most important work for everyone in this country.
I love C-SPAN because I get to hear all the voices.